Can a company make up rules as they go about salary exemptand salary non-exempt?

UPDATED: Sep 8, 2011

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Can a company make up rules as they go about salary exemptand salary non-exempt?

I’ve been with a company over a year. Never filled out a time sheet because I am salary. This is from my offer letter: “The compensation for this position will be a bi-weekly salary of $1120 paid bi-weekly”. We received this email today from the new HR guy, who decided we are salary non-exempt. It read, “As I mentioned to you the other day, the three of you are Salary Non-exempt which means you are paid on an hourly basis. You need to begin recording your time on a time sheet for the hours that you work. Time away from work is not paid unless authorized”. Can they do that?

Asked on September 8, 2011 under Employment Labor Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

A company may not make up rules regarding exempt vs. non-exempt--those rules are set by law and regulation (e.g. by the Fair Labor Standards Act, and the Labor Dept. regulations implementing it.


1) A company may redefine a job, so what was exempt becomes non-exempt or vice versa; companies are free to set the terms and conditions of employment.

2) If the company honestly concludes that it has misapplied the law and rules, it not only can, but should, reclassify the individual to make sure it is in compliance; a company does not have to continue to be in error because it made a mistake earlier.

Also, note that a salaried person may be non-exempt--while it is necessary to have a salary to be exempt from overtime, not all salaried people are exempt, because there are other criteria (regarding duties and authority) which must be met, too; you can find those criteria on the Dept. of Labor website. If you were a non-exempt salaried person, the company can certainly choose to now pay you as a non-exempt hourly employee.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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